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Economics Unit 1
| Term | Definition |
|---|---|
| need | something essential for survival |
| want | something that people desire but that is not necessary for survival |
| goods | the physical objects that someone produces |
| services | the actions or activities that one person performs for another |
| scarcity | the principle that limited amounts of goods and services are available to meet unlimited wants |
| economics | the study of how people seek to satisfy their needs and wants by making choices |
| shortage | a situation in which consumers want more of a good or services than producers are willing to make available at a particular price |
| entrepreneur | a person who decides how to combine resources to create goods and services |
| factors of production | the resources that are used to make goods and services |
| land | all natural resources used to produce goods and services |
| land | all natural resources used to produce goods and services |
| labor | the effort people devote to tasks for which they are paid |
| capital | any human-made resource that is used to produce other goods and services |
| physical capital | the human-made objects used to create other goods and services |
| human capital | the knowledge and skills a worker gains through education and experience |
| trade-off | the act of giving up one benefit in order to gain another |
| "guns or butter" | the government decision to produce more military goods or consumer goods |
| opportunity cost | the most desirable alternative given up as the result of a decision |
| thinking at the margin | the process of deciding whether to do or use one additional unit of some resource |
| cost/benefit analysis | a decision-making process in which you compare what you will sacrifice and gain by a specific action |
| marginal cost | the extra cost of adding one unit |
| marginal benefit | the extra benefit of adding one unit |
| production possibilities curve | a graph that shows alternative ways to use an economy's productive resources |
| production possibilities frontier | a line on a production possibilities curve that shows the maximum possible outcome an economy can produce |
| efficiency | the use of resources in such a way as to maximize the output of goods and services |
| underutilization | the use of fewer resources than an economy is capable of using |
| law of increasing costs | an economic principle which states that as production shifts from making one good or service to another |
Created by:
JAveryUC
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